Under the proposal, the RAF would include specific disclosure
advising purchasers of the risks of investing in securities under
the accredited investor exemption, having them acknowledge exactly
how they satisfy the exemption and confirming the type and value of
the securities they are purchasing. A salesperson involved in
selling the securities would also have to sign and date the form,
including particulars as to how they may be contacted and their
Risk Acknowledgment Form
In providing comments to the CSA on their
proposal, we identified a number of concerns with the
RAF. First, we anticipate that the RAF requirement will place an
administrative burden on issuers, as the RAF must be presented to
purchasers in physical form on one double-sided page and two copies
of the form are required to be physically signed. In keeping with
developing practices, the bulk of document execution and delivery
now takes place electronically. The additional administrative
burden may also create a disincentive for foreign issuers, in
particular, to extend exempt offerings to Canadian-resident
individuals who otherwise qualify as accredited investors. The
proposal would also require that the issuer keep a copy of the RAF
for eight years following the distribution. This requirement is not
consistent with most record-retention requirements, and it is
unclear from the proposal whether the RAF would have to be retained
in physical form.
Further, most of the information included in the RAF is
information that would typically already be included in
subscription materials. Imposing the RAF requirement could create
issues with respect to the validity of representations made in
subscription agreements and the ability to rely on them. The RAF
requirement would also effectively impose a due diligence
obligation as to the basis of subscriber representations where,
typically, unless a party is aware of a reason to question a
particular representation, that party is entitled to rely on the
representation without further investigation.
Finally, in respect of concerns regarding investors investing in
inappropriate products or products that the investor does not
understand, the proper avenue to address these concerns is through
dealer "know your client", "know your product"
and suitability obligations. Mandating the use of a RAF will not
address any investor knowledge gap. While these investor
protections would not be available in cases of an investor
purchasing securities directly from the issuer, these concerns
could be addressed by requiring the issuer to disclose to the
investor that the issuer is not a registrant and therefore is not
subject to the same obligations vis-à-vis the investor as a
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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